Wells Fargo Small Business Index: Business Owners More Optimistic to
Start 2013

January 24, 2013 12:17 PM Eastern Daylight Time

SAN FRANCISCO--(BUSINESS WIRE)--After the Wells Fargo/Gallup Small Business Index dropped to the most
pessimistic level in two years in November, business owners are more
optimistic as 2013 begins. The latest Index improved 20 points to
positive 9 (+9) in January 2013, up from negative 11 (-11) in November
2012, indicating an improvement in optimism since the November
elections. Key drivers of this improvement in the survey, conducted Jan.
7-11, 2013, include increased business owner optimism about revenues,
capital spending, and jobs over the past 12 months and more optimism
about their overall financial situation, revenues, cash flow, and jobs
over the next 12 months. A year ago, in January 2012, the Index was at
positive 15 (+15).

“Business owners are feeling a bit more positive at the
beginning of the year, but they also express concern about the operating
environment that could impact future business decisions, such as hiring
new employees.”

While optimism improved from the fourth quarter, the survey paints a
mixed picture with respect to jobs and hiring. More business owners (71
percent) expect the number of jobs at their companies to stay the same
over the next 12 months, and business owners planning to add jobs during
the same period remained unchanged at 17 percent. Among those who hired
new employees the past 12 months, 35 percent of owners are hiring fewer
employees than they need, up from 29 percent in January 2012, but below
the 42 percent of November 2010.

“At a time when news headlines report mixed economic news and
uncertainty in Washington, our survey shows the volatility of business
owner sentiment today,” said Doug Case, Small Business Segment manager
for Wells Fargo. “Business owners are feeling a bit more positive at the
beginning of the year, but they also express concern about the operating
environment that could impact future business decisions, such as hiring
new employees.”

Small Business Hiring

This quarter, the Index survey included additional questions on hiring
and jobs. When small business owners who are not
hiring were asked for the reason, the top responses were:

Don’t need additional employees at this time (81 percent)

Worried about the revenues and sales to justify new employees (74
percent)

Concerned about the status of the U.S. economy (66 percent)

Worried about the potential cost of health care (61 percent)

The number of small business owners saying they are not hiring for fear
they may no longer be in business in 12 months increased to 30 percent
in January up from 24 percent from one year ago.

The top reasons small business owners say they are hiring include:

Increased consumer or business demand (70 percent)

Expanding their business operations (68 percent)

When looking for new employees, 63 percent of small business owners
report using word-of-mouth and 47 percent employee referrals.
Twenty-three percent of owners say it is very difficult and another 30
percent say it is somewhat difficult to find qualified employees – about
the same as in January 2012. Twenty-seven percent of owners say the
difficulty of finding qualified employees has hurt their business over
the past 12 months, up from 21 percent a year ago.

Forty percent of owners say they would look for temporary or contract
workers when hiring while 36 percent say they would seek part-time
employees, and 22 percent full-time employees. When they can’t afford to
hire new employees, 28 percent of owners say they turn to their spouse
for unpaid help, 14 percent turn to their children, 13 percent to a
friend, 7 percent to another relative, and 6 percent to a student.

Small Business Index Key Drivers

Wells Fargo, together with Gallup, surveys small business owners
quarterly across the nation to gauge their perceptions of their present
situations (past 12 months) and future expectations (next 12 months) in
six key areas: financial situation, cash flow, revenues, capital
spending allocation, hiring, and credit availability.

Index Scores: Q1 2012 – Q1 2013

Overall Index Score

Present Situation

Future Expectations

Q1 2013

(surveyed January 2013)

9

-2

11

Q4 2012

(surveyed November 2012)

-11

-10

-1

Q3 2012

(surveyed July 2012)

17

-1

18

Q2 2012

(surveyed April 2012)

23

-1

24

Q1 2012

(surveyed January 2012)

15

-6

21

The January upturn in the Index was impacted by improvement in both
Future Expectations of 12 points and an 8-point rise in Present
Situation. Substantial changes were seen in several survey components:

Since August 2003, the Wells Fargo/Gallup Small Business Index has
surveyed small business owners on current and future perceptions of
their business financial situation. The Index consists of two
dimensions: 1) Owners’ ratings of the current situation of their
businesses and, 2) Owners’ ratings of how they expect their businesses
to perform over the next 12 months. Results are based on telephone
interviews with 601 small business owners in all 50 United States
conducted Jan. 7-11, 2013. The overall Small Business Index is computed
using a formula that scores and sums the answers to 12 questions — six
about the present situation and six about the future. An Index score of
zero indicates that small business owners, as a group, are neutral --
neither optimistic nor pessimistic -- about their companies’ situations.
The overall Index can range from -400 (the most negative score possible)
to +400 (the most positive score possible), but in practice spans a much
more limited range. The margin of sampling error is +/- four percentage
points.

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified,
community-based financial services company with $1.4 trillion in assets.
Founded in 1852 and headquartered in San Francisco, Wells Fargo provides
banking, insurance, investments, mortgage, and consumer and commercial
finance through more than 9,000 stores, 12,000 ATMs, the Internet (wellsfargo.com),
and has offices in more than 35 countries to support the bank’s
customers who conduct business in the global economy. With more than
265,000 team members, Wells Fargo serves one in three households in the
United States. Wells Fargo & Company was ranked No. 26 on Fortune’s 2012
rankings of America’s largest corporations. Wells Fargo’s vision is to
satisfy all our customers’ financial needs and help them succeed
financially.

Wells Fargo loans more money to America’s small businesses than any
other bank (2002-2011 Community Reinvestment Act government data) and is
a leading lender to women- and diverse-owned businesses. With the
nation’s largest network of retail banking stores, and an award-winning
online library of videos, articles and webcasts known as the Business
Insight Series (www.wellsfargobusinessinsights.com),
Wells Fargo provides business owners with timely advice and information
to educate and help them succeed financially. For more information, or
to speak with a Wells Fargo banker, visit wellsfargo.com/biz
or call the National Business Banking Center at 1-800-CALL-WELLS.

About Gallup

For more than 70 years, Gallup has been a recognized leader in the
measurement and analysis of people’s attitudes, opinions and behavior.
While best known for the Gallup Poll, founded in 1935, Gallup’s current
activities consist largely of providing marketing and management
research, advisory services and education to the world’s largest
corporations and institutions.

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